State Could Face Imminent Debt Crisis: Analysts

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  • TEMPO.CO, Jakarta - The increasing amount of foreign debt by private companies is alarming, analysts said. "If we're not careful, Indonesia will fall into a debt crisis like European countries," Juniman, chief economist at Bank Internasional Indonesia, said yesterday.

    As of September 2014, Juniman said, the total value of Indonesia's foreign debt reached US$292.3 billion, of which the private sector accounted for US$ 159.4 billion.

    Meanwhile, debt-to-GDP ratio has now stood at 30 percent, while the debt-to-exports ratio reached 40 percent. "It's a yellow light as the ratios are at around 30 to 60 percent."

    This condition is exacerbated by the falling rupiah rate against the US dollar, given that 70 percent of foreign debt is denominated in US dollar and most companies' get their revenues in rupiah. .

    University of Indonesia economist Lana Soelistianingsih said private companies with foreign debts should start hedging immediately. She also suggested the government to push SOEs with large foreign debts such as  ertamina, PLN, and Garuda Indonesia to hedge.